Bond market already signalling the pace of growth could slow as coronavirus cases rise in the United States
Author of the article:
TORONTO — With some 60 per cent of its population vaccinated against COVID-19, Canada tops a ranking of major countries fighting the pandemic, but that success is unlikely to fully shield its commodity-linked economy from the global spread of the Delta variant.
The bond market already is signalling the pace of Canada’s economic growth could slow as coronavirus cases rise in the United States, its largest trading partner, and in some other major export markets.
While the high vaccination rate reduces the chances of large-scale lockdowns in Canada, a slower rate of inoculation in some parts of the world could add to supply chain disruptions and weigh on exports, analysts said.
“For Canada, as a small trading nation, we need to care about what’s going on in other parts of the world,” said Royce Mendes, senior economist at CIBC Capital Markets. “Not only for the ethical and human reasons but also because of the economic reasons.”
Canada is a major exporter of auto parts and commodities, including oil and copper, so its economy tends to be sensitive to the global growth outlook. The United States, which accounts for about 75 per cent of Canadian exports, is facing a Delta-driven surge in infections as the pace of its inoculation program slows.
Fears that the highly-contagious variant will hold back the economic recovery has contributed to a plunge in U.S. and Canadian bond yields in recent weeks. The yield on U.S. 10-year Treasury Inflation-Protected Securities, the so-called real yield, hit a record low on Tuesday at around minus 1.19 per cent, while Canada’s equivalent rate was at minus 0.62 per cent.
The price of oil has retreated 10 per cent after notching a seven-year high near US$77 a barrel in July, while the price of copper has eased from May’s record peak.
“Where the Delta variant will have more impact is probably in the emerging markets where vaccination is not as high, and that could affect supply chains,” said Jimmy Jean, chief economist at Desjardins Group.
“If that means that industrial production globally takes a hit, for sure we’re going to feel that effect in Canada through our exports,” Jean added.
Data on Thursday showed no slowdown in demand for Canadian goods, with exports rising by 8.7 per cent to a record $53.76 billion in June. The Bank of Canada expects the economy to grow 6 per cent this year.
But supply chain pressures are already being felt in Canada’s manufacturing sector, with activity growing in July at the slowest pace in five months.
Additionally, businesses in the travel and airline industries may be nervous that rising U.S. infections could disrupt Canada’s plans to allow fully vaccinated American travellers into the country. Canada is scheduled to reopen its border to that group on Monday.
“If things take a certain trajectory in the U.S., you could think that we would close borders again to prevent that spilling over to Canada,” Jean said.
Pent-up demand for services could mean that Canada’s economy is less dependent than usual on trade. Still, analysts are paying close attention to the economic impact of the Delta variant.
The outlook for trade “is heavily contingent on what happens with the virus in the U.S.,” Mendes said.
© Thomson Reuters 2021
OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.
Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.
The change is scheduled to come into force on Nov. 8.
As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.
The program has also come under fire for allegations of mistreatment of workers.
A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.
In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.
The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.
According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.
The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.
Temporary foreign workers in the agriculture sector are not affected by past rule changes.
This report by The Canadian Press was first published Oct. 21, 2024.
— With files from Nojoud Al Mallees
The Canadian Press. All rights reserved.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
The Canadian Press. All rights reserved.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
The Canadian Press. All rights reserved.
A look at what people are saying about the Bank of Canada’s rate decision
Abdelrazik tells of despair when Ottawa denied him passport to return home from Sudan
BoC delivers half percentage point rate cut, says it now must keep inflation at 2%
Quick Quotes: What Liberal MPs have to say as the caucus debates Trudeau’s future
Nova Scotia premier announces one point cut to HST, to 14 per cent, starting April 1
University of Waterloo stabber should face lengthy sentence: Crown
Hiring Is a Process of Elimination
Search of Manitoba landfill for remains of slain First Nations women on track: Kinew
